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Infrastructure, Information & Communication Technology and Firms’ Productive Performance of the Indian Manufacturing

Author

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  • Marie-Ange Véganzonès-Varoudakis

    (CERDI - Centre d'Études et de Recherches sur le Développement International - UCA [2017-2020] - Université Clermont Auvergne [2017-2020] - CNRS - Centre National de la Recherche Scientifique)

  • Arup Mitra
  • Chandan Sharma

Abstract

The Make in India program aims at building best-in-class manufacturing set up in the country. However, public infrastructure is considered to be one of the biggest obstacles for the growth of manufacturing in the country. In this context, this paper examines the role of infrastructure and information & communication technology (ICT) on total factor productivity (TFP) and technical efficiency (TE) of the Indian manufacturing sector for the period 1994-2010. We use advanced estimation techniques to overcome problems of non-stationary, omitted variables, endogeneity and reverse causality by applying fully modified OLS, panel cointegration and System GMM. Estimation results suggest that the impact of infrastructure and ICT is rather strong. Interestingly, sectors exposed to relatively more to foreign competition (e.g. Transport Equipment, Textile, Chemicals, Metal & Metal Products) are more sensitive to infrastructure. In the light of these findings, policy implications are brought out.

Suggested Citation

  • Marie-Ange Véganzonès-Varoudakis & Arup Mitra & Chandan Sharma, 2012. "Infrastructure, Information & Communication Technology and Firms’ Productive Performance of the Indian Manufacturing," Post-Print hal-03058747, HAL.
    • Handle: RePEc:hal:journl:hal-03058747
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    3. John Bosco Nnyanzi & Susan Kavuma & John Sseruyange & Aisha Nanyiti, 2022. "The manufacturing output effects of infrastructure development, liberalization and governance: evidence from Sub-Saharan Africa," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 49(2), pages 369-400, June.
    4. Rawat, Pankaj S. & Sharma, Seema, 2021. "TFP growth, technical efficiency and catch-up dynamics: Evidence from Indian manufacturing," Economic Modelling, Elsevier, vol. 103(C).
    5. Xue, Biao & Lin, Yan & Ren, Fangxiao & Li, Runfo, 2024. "Business environment ecosystem and manufacturing upgrading: A configurational approach," Economic Analysis and Policy, Elsevier, vol. 82(C), pages 1225-1237.
    6. Xin Du & Hengming Zhang & Yawen Han, 2022. "How Does New Infrastructure Investment Affect Economic Growth Quality? Empirical Evidence from China," Sustainability, MDPI, vol. 14(6), pages 1-30, March.
    7. Timilsina,Govinda R. & Sahoo,Pravakar & Dash,Ranjan Kumar, 2022. "Why Do Indian States Differ in Their Infrastructure Development ?," Policy Research Working Paper Series 10086, The World Bank.
    8. Moein Khazaei & Mohammad Ramezani & Amin Padash & Dorien DeTombe, 2021. "Creating shared value to redesigning IT-service products using SYRCS; Diagnosing and tackling complex problems," Information Systems and e-Business Management, Springer, vol. 19(3), pages 957-992, September.
    9. Khanna, Rupika & Sharma, Chandan, 2021. "Does infrastructure stimulate total factor productivity? A dynamic heterogeneous panel analysis for Indian manufacturing industries," The Quarterly Review of Economics and Finance, Elsevier, vol. 79(C), pages 59-73.
    10. Li, Chunying & Zhang, Jinning & Lyu, Yanwei, 2022. "Does the opening of China railway express promote urban total factor productivity? New evidence based on SDID and SDDD model," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    11. Chandan Sharma, 2018. "Productivity and Size of Firms: Evidence from Indian Manufacturing," Economics Bulletin, AccessEcon, vol. 38(2), pages 791-798.
    12. Zhou, Kuo & Wang, Qiaochu & Tao, Yunqing & Li, Xiaofan, 2024. "Information infrastructure construction and firm export performance in China," Research in International Business and Finance, Elsevier, vol. 70(PA).
    13. Feng, Yuan & Chen, Zhi & Nie, Changfei, 2023. "The effect of broadband infrastructure construction on urban green innovation: Evidence from a quasi-natural experiment in China," Economic Analysis and Policy, Elsevier, vol. 77(C), pages 581-598.
    14. Khanna, Rupika & Sharma, Chandan, 2022. "Impact of information technology on firm performance: New evidence from Indian manufacturing," Information Economics and Policy, Elsevier, vol. 60(C).
    15. Rath, Badri Narayan, 2018. "Productivity growth and efficiency change: Comparing manufacturing- and service-based firms in India," Economic Modelling, Elsevier, vol. 70(C), pages 447-457.
    16. Dong Hyun Lee & Ga Youn Hong & Sang-Gun Lee, 2019. "The relationship among competitive advantage, catch-up, and linkage effects: a comparative study on ICT industry between South Korea and India," Service Business, Springer;Pan-Pacific Business Association, vol. 13(3), pages 603-624, September.
    17. Zolfaghari, Mehdi & Kabiri, Mahbobe & Saadatmanesh, Hamideh, 2020. "Impact of socio-economic infrastructure investments on income inequality in Iran," Journal of Policy Modeling, Elsevier, vol. 42(5), pages 1146-1168.

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    More about this item

    Keywords

    Infrastructure; Information & Communication Technology; Firms’ Productivity; Manufacturing; India;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • H54 - Public Economics - - National Government Expenditures and Related Policies - - - Infrastructures
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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